Home/Economy/ Trump asks SEC to study six-month reporting system for public firms

Trump asks SEC to study six-month reporting system for public firms

Cory Rios |Sunday, August 19, 2018

President Trump speaks during a Cabinet meeting at the White House on Aug. 16

"If public companies moved from quarterly to semi-annual reporting, that would deprive investors of timely information and dramatically increase the potential for insider trading", said Robert Pozen, Senior Lecturer at the MIT Sloan School of Management.

The SEC was created in 1934 in the midst of the great depression and requires publicly-traded companies to issue quarterly and annual earnings reports to keep the public informed on their operations and financial situation.

"Many market participants, as well as the Business Roundtable which we are a part of, have been discussing how to better orient corporations to have a more long-term view", Nooyi said in a statement emailed to Reuters.

Trump believes he has the support of some executives for a change. Putting together quarterly reports is also a huge cost for public companies, requiring resources to be directed at reporting rather than producing goods and services for the market. "Stop quarterly reporting & go to a six month system", said one.

President Donald Trump said he's asked the Securities and Exchange Commission to study ending quarterly reporting for USA businesses in order to ease regulations and spur growth. "So we're looking at that very, very seriously", Trump said as he was boarding Marine One on the White House lawn Friday morning.

Half-yearly reporting would mark a huge change in USA disclosure requirements and put them in line with European Union and United Kingdom rules.

The SEC consists of five commissioners appointed by the president, although there now are only four in place, three named by Trump, including Clayton. We start preparing three weeks in advance every quarter, essentially taking nearly a third of executives´ time each quarter, ' said Bryan Sheffield, chief executive of shale oil producer Parsley Energy Inc.

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Trump held a dinner for business executives on Aug 8, two days after Nooyi announced her departure, at his golf club in Bedminster, New Jersey.

Quarterly financial reports are a staple of US corporate practice.

Trump has asked the Securities and Exchange Commission to study the impact of such a change. The most recent data from the United Kingdom shows that only 57 of the companies in the benchmark FTSE 100 index were still issuing quarterly reports as of September 2017, according to the Investment Association.

Quarterly earnings guidance is used by Wall Street and City analysts to build their earnings estimates and gauge company performance against these figures.

'Investors and other stakeholders benefit when regulations ensure that important information is promptly and transparently provided to the marketplace, ' said Amy Borrus, CII´s deputy director.

He would need to draft a proposed rule-change which would then be put to an industry consultation during which investors, companies, exchanges, pension funds and public interest groups would likely bombard the SEC with information.

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